A new shopping structure - the expected change in purchasing habits
There's no easy way to say it: malls as we once knew them are changing. As consumer behaviors shift, major retailers are pulling up stakes, leaving holes in shopping centers all over the country.
Over the next few months, 42 Sears locations are expected to close up shop, while 108 Kmart stores do the same. Macy's is also expected to shutter 100 locations — nearly 15 percent of its store base — according to recent reports.
The departure of these anchor stores, that once served to drive business to smaller retailers at these shopping centers, has had a noticeable impact on overall consumer visitation. Foot traffic data from xAd shows that mall traffic in the United States decreased by 16% from January to March of this year when compared to visitation to the top 200 brands on their platform.
But languishing in-store sales at these large department stores may open up an opportunity for another type of retailer to take over the role of anchor. Grocery stores are perfectly suited to replace department stores, and could breathe new life into American malls. Grocery Store Visits are Far From Dead Whereas e-commerce is eating into many retail brands' in-store profits, it's an entirely different story for grocery stores. Consumers are far slower to get into the habit of buying their groceries online. Research firm Cowen & Co estimates that grocery ecommerce sales in the US accounted for less than 5% of total grocery sales last year.
Why the reluctance to buy fruit and bread online? Data from Market Track reveals that 51% of US grocery buyers want to be able to see and touch the product, 42% want their groceries immediately, and 31% have concerns about the quality of the items that will be delivered to their door. What's more, 27% of consumers actually enjoy grocery shopping, preferring the in-store experience to the convenience of buying online.
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This is where that mall opportunity comes into play. As The Washington Post reports, supermarkets are increasingly taking over mall locations vacated by retail brands. Recently, Kroger Co. bought a spot in a Ohio mall that was formerly owned by Macy's, and Wegmans Food Market took over a Massachusetts mall spot that once housed a J.C. Penney. Grocery chain Aldi is also reportedly considering mall store vacancies, too.
"It's certainly an emerging trend," Tom McGee, chief executive of the International Council of Shopping Centers told The Washington Post. "Part of it is convenience, the ability to do things in one location."
Convenience aside, there are other reasons why grocery stores are a logical choice to replace department store brands. Mall shoppers over-index at grocery stores by 15% when compared with other businesses, according to recent xAd data. Consumers who frequent malls are also frequent users of large grocery chains; mall shoppers are 98% more likely to visit Safeway, 47% more likely to visit Kroger, and 26% more likely to shop at Albertsons.
There's already proof that merging grocery brands with a mall experience has the potential to produce results. Target and Walmart, both of which are often found in malls, have begun offering grocery items in recent years as they morph into transitional retailers and attempt to grab a bigger share of the retail market.
From the perspective of mall landlords and developers, grocery stores are appealing in that they stand to help transform ailing malls into a one-stop shopping destination, and up the frequency with which consumers visit the mall site. Meanwhile, grocery brands appreciate the ample parking and visibility of malls, Mark Ordan — who has been chief executive of both a grocery chain and a mall operator — told The Washington Post. In other words, it's a win-win.
It's too early to say exactly how much of an impact grocery chains will have on the future mall ecosystem. But given the potential of this partnership, it may not be long before consumers find themselves pulling into the local mall with a grocery list in hand.
Sarah Ohle is vice president of Marketing Insights at xAd